Speed is of the essence with loan scheme - Mark Hartery, director of The Bespoke Banking Consultancy
During these unprecedented times, the Government has given the responsibility to the banks to be the gatekeeper to supporting our businesses with their short-term cashflow requirements over the next few months.
Speed is of the essence but the banks' systems are cumbersome and they still seem to be applying strict due diligence to requests for the Government-backed Coronavirus Business Interruption Loan Scheme.
These are not requests for investment in new machinery or other assets, but a genuine request for short-term support to assist the cashflow.
As we know, businesses can be profitable but still run out of cash which allows them to keep trading and it is this support that is vital if businesses of all sizes are to survive this crisis.
We have been assisting a number of clients to try to access this scheme but a few weeks in and we have yet to get any positive responses from the banks as they continue to look into requests.
What businesses need is quick cash to allow them to continue trading and without that many, many will fail.
Supplier payments are being withheld right through the chain as every business seeks to hold on to its vital cash, but ultimately that means somewhere in the chain it will be the final straw for many.
Businesses that are doing the right thing and paying their suppliers on time are being penalised for doing that.
For most businesses, access to cash will allow them to be in the best possible position to trade themselves out of this when restrictions are lifted but for others, particularly seasonal businesses, it may take a bit longer.
Borrowing rates have never been so cheap. The Government has set up the scheme with capital repayment holidays and interest holidays in the short term.
Let's get the money to the businesses that need it now and ensure a proper analysis is conducted at the end of the crisis so businesses are able to restructure their borrowing at that stage.
Typically, businesses will be looking to replace income they would normally have generated in the three or four months of this crisis (25-33 per cent of their annual turnover) - that is what we need the banks to supply, backed by the Government's promise.
If they have that they can pay employees, keep supplier payments up to date, pay their rent and ensure they are ready to go when this is all over.
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